The thoughts of a journalist/libertarian–conservative/Christian husband, father, Eagle Scout and aficionado of obscure rock music. Thoughts herein are only the author’s and not necessarily the opinions of his family, friends, neighbors, church members or past, present or future employers.

Day: October 4, 2011

The latest example that the state has a long way to go to a competitive business climate (a favorite subject on this blog, as you know) came last week.

Development Counsellors International rated Wisconsin 38th in “A View from Corporate America: Winning Strategies in Economic Development Marketing,” a triennial survey of corporate site selection executives, the people who decide where a business decides to place a new location.

The top five were Texas, North Carolina, South Carolina, Tennessee and Florida. Those states have a few things in common that Wisconsin apparently doesn’t have, or at least didn’t have when the survey was conducted last year:

Among those who named Texas as having a favorable business climate, the factors mentioned most frequently were: tax climate (44%); pro-business climate (31%) and economic development support/incentives (15%).

Among those who named North Carolina as having a favorable business climate, the factors mentioned most frequently were: low cost (29%); pro-business climate (22%); and strong workforce/talent (22%).

The top reasons provided by those who named South Carolina included low cost (27%); right to work state (23%) and pro-business climate (20%).

The reasons given in 2011 emphasize costs, taxes and incentive offerings. In 2008, workforce was of greater importance.

That is hardly surprising. It is an example of how markets work. When the economy is going well, businesses have to get more creative in getting employees, but states can be less aggressive in attracting businesses. The opposite is the case in bad economic times — employees have to get more creative to find jobs, and states have to become more aggressive in attracting businesses.

Wisconsin is not in the top five, but at least it isn’t in the bottom five — Michigan, New Jersey, Illinois, New York and California. As with the top five, the bottom five also are consistent:

California was cited for having high taxes by 40% of respondents, while 36% mention too much regulation, 23% said high cost and 17% said anti-business climate. Among those who named New York as having a least favorable business climate, 61% cited taxes, 38% said costs, 19% said regulations and 11% said antibusiness climate. Taxes (especially corporate taxes) (49%), fiscal problems/state budget deficits (22%) and costs (20%) earned Illinois a position in this list.

You’ll note that after eight years of the Doyle misAdministration and two years of a Democrat-controlled Legislature, Wisconsin was closer to worst than first. (Of the survey respondents, 2.5 percent put Wisconsin among the “Most Favorable Business Climate Rankings,” and 4.1 percent put the state on the “Least Favorable Business Climate Rankings” list.) Which description as applied to business applied more to Wisconsin as of last year: Low business taxes or high business taxes? Pro-business climate or anti-business climate? “Fiscal problems/state budget deficits”? (Which remain a problem.) “Too much regulation”?

The survey also rated state and regional economic development organizations. Not one from Wisconsin was on either list; the state list included the Texas Governor’s Office of Economic Development, the North Carolina Department of Commerce. (The regional list included the Austin Chamber of Commerce. Austin, Texas, is thought to be like Madison but with hotter weather. But apparently Austin, Texas is more interested in economic development outside state government and the state university than Madison.)

The Wisconsin Reporter, the only Wisconsin media I’ve seen reporting on this latest poor business climate comparison, put some spin on the DCI report:

A new survey ranking the Badger State as not having the most business friendly climate was conducted before Gov. Scott Walker and the GOP-led Legislature’s pro-business laws took effect.

And economic development leaders say the Walker administration is sending the message that times are changing in Wisconsin. …

The 2011 survey was conducted before legislation, such as tort reform and income-tax incentives for businesses that come to Wisconsin, went into effect.

Walker campaigned on a pledge to create 250,000 private-sector jobs during his first term and has made “Wisconsin Is Open for Business” his administration’s slogan.

The Walker administration often points to a recent study by “Chief Executive” magazine as proof that business leaders’ opinions of Wisconsin are changing. In the national survey, CEOs ranked Wisconsin the 24th best state for business, up from 41st in 2010.

The Walker administration has taken some correct steps. Replacing the Wisconsin Department of Commerce, which did more to harass commerce than promote commerce, with the Wisconsin Economic Development Corp. is a positive step.

It’s also clear, though, that the legislation of earlier this year hasn’t gone far enough. Nothing the Legislature approved did anything to curb the Department of Natural Resources, which has earned a nationwide reputation for making it as difficult as possible to do business in Wisconsin. The Wisconsin Reporter quotes Steven Sobiek, the City of Columbus’ director of economic development and energy sustainability, as saying that “My strong sense is that …. we are just not competing as effectively as a state as we could be against other states. That means marketing. That means giving local municipalities tools.”

Sobiek suggests “using revenue from a local sales tax for an economic development fund to encourage business development,” similar to the 0.5-percent Fond du Lac County sales tax that is funding the Mercury Marine retention package. If local officials had better records of thriftiness with the tax dollars they now have, I might be more convinced, but raising local taxes to wave goodies at business looks from here like a local variation of the Doyle Administration’s economic development strategy, such as it was. And you know how well that turned out.

The Wisconsin Reporter’s opposing view came from Sally Simpson, a member of the Kenosha County Democratic Party board, who said perhaps what she didn’t intend to say about “the turmoil” over public employee collective bargaining of earlier this year: “I think the business person sitting at home, wherever he is, (is) asking, ‘Do I want to bring my company into a state like that?’ They get offers to go everywhere.”

If Simpson — a retired teacher and not an expert on economic development — actually meant to say that business owners watch TV coverage of union thugs harassing taxpayers, elected officials and actually productive people, and then ask “Do I want to bring my company into a state like that?”, then she may be right. And thus the public employee unions and their apparatchiks in the Democratic Party and elsewhere are directly responsible for Wisconsin’s rotten business climate.

The Wisconsin Reporter adds this gem: “Democrats accuse the GOP agenda of being too cozy with business, at the expense of the state’s workers.” Given how crappily Democrats ran the state in the 2009–10 Legislature, and the voters’ reaction to same last Nov. 2, by rights Democrats should have forfeited the right to any opinion about economic development.

What comes out of this week’s Legislature special session on jobs may or may not improve the state’s business climate more. That may be up to Sen. Dale Schultz (R–Richland Center), who is viewed, rightly or not, as the squishiest Republican in the one-vote-majority Senate. The issue of venture capital, the lack of which has hampered high-tech and other businesses in this state, has yet to be dealt with given the reluctance of the Legislature (rightly or not) to create a venture capital fund.

If the Legislature is looking at legislation to pass in the jobs special session, here’s a list from earlier this year from listeners of Jay Weber of WISN radio in Milwaukee that haven’t been passed by the Legislature:

5. Repeal combined reporting

8. Bring back TABOR or some taxpayer bill of rights.

9. End the minimum markup law

15. Create a rainy day fund from excess or unexpected revenues that pour into the state coffers during boom times. (only talk of this so far, so far as I know)

16. Eliminate the state income tax on retiree pensions to help keep them in Wisconsin.

17. Freeze the property taxes of retirees to keep retirees in Wisconsin.

24. End early retirement for public employees, so they can no longer live off of a state pension longer than they ever worked at the job.

41. Review and repeal the so-called ‘smart growth’ environmental requirements and restrictions, which have hit the point of absurdity.

The DCI rankings, and for that matter the improved CNBC and Chief Executive magazine rankings show Wisconsin has a long way to go to become a great state in which to do business.

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